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Federated Investors’ AUM up 24% for year after Hermes acquisition

Federated Investors (FII) reported $484.9 billion in assets under management as of March 31, up 5% from three months earlier and up 24% from a year earlier, the company said in its first-quarter earnings statement released Thursday.

The firm's AUM was boosted by inflows into liquidity management products and investor interest in its money market funds.

"Liquidity management products saw strong flows in the first quarter, as Federated's money market funds offered the potential for higher yields than deposit accounts," said J. Christopher Donahue, president and CEO, in the earnings release. "Assets in our prime, government and tax-free money market funds were up from the previous quarter, and investors turned to Federated for liquidity management solutions that provide diligent credit analysis, broad diversification and competitive yields."

By asset class, Federated equity strategies had $80.2 billion in assets, up 11% from three months earlier and up 36% from year earlier. Equity products experienced net outflows of $790 million during the first quarter, compared with net outflows of $2.5 billion in the fourth quarter and net outflows of $2.1 during the first quarter of 2018.

Fixed-income assets rose to $64.1 billion, representing a 1% increase over Dec. 31, and a 3% increase over March 31, 2018. Fixed-income net outflows were $925 million during the quarter, compared with net outflows of $2.1 billion in the previous quarter. In the year-earlier quarter, the manager experienced fixed-income net outflows of $1.7 billion.

Assets under management in alternative/private markets strategies totaled $17.9 billion as of March 31, down 2.5% from Dec. 31 and up 5,105% from March 31, 2018. Federated began reporting assets and flows for alternative/private markets and multiasset strategies in the third quarter of 2018 after it completed its acquisition of a 60% interest in Hermes Investment Management in July.

Across its alternative/private markets strategies, Federated experienced $545 million in net outflows compared with net outflows of $93 million during the previous quarter and net outflows of $26 million in the year-earlier quarter.

Multiasset AUM was $4.3 billion as of March 31, up 4% from Dec. 31 and down 12% year-over-year. Multiasset net outflows were $137 million during the first quarter, compared with $250 million in net outflows in the fourth quarter. In the first quarter of 2018, multiasset net outflows were $107 million.

Total revenue for the quarter was $307 million, remaining flat from the prior quarter but up 16.4% from the year-earlier quarter. Net income for the first quarter was $54.5 million, down 11% from fourth quarter, and down 10% from the first quarter of 2018.